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Can Toyota Maintain Lead on Hybrids?

Posted on September 15, 2008
Filed Under Announcements, Future Speculation, Industry News, Polls & Studies, Research, Toyota Prius | Leave a Comment

Ever since Toyota launched its Prius gas-electric hybrid in the United States in 2000, Toyota has been king of the hybrid hill, but in the coming years that position will be challenged like never before as other automakers introduce a slew of new vehicles with electric motors.

Over the next four years, seven automakers plan to introduce at least 16 new hybrid or electric vehicles in the United States, and hybrid sales are expected to increase from about 360,000 this year to 1.3 million by 2014, according to J.D. Power and Associates.

“We are going to see every automaker having at least one hybrid on the market” by 2011, said Mike Omotoso, a hybrid expert with J.D. Power.

But Bob Carter, group vice president and general manager of Toyota’s U.S. sales arm, said additional competition will help Toyota expand the hybrid market.

“It sounds like a little bit of corporate spin, but we honestly feel like it’s great news,” he said, “because it’s tough developing a market and introducing technology to a market as large as North America by yourself, and we continue to see nothing more than just continued expansion of the acceptance of that market.”
Longtime hybrid leader

Toyota introduced the Prius, a gasoline-electric hybrid, in Japan in 1997 and in the United States in 2000. Since then, Toyota has sold more than 1.5 million hybrids globally. By the early 2010s, Toyota is aiming for annual hybrid sales of 1 million.

“No question, they are the leader,” said Don Walkowicz, executive director of the U.S. Council for Automotive Research LLC, a consortium that includes the Detroit Three and five energy companies. “Can anybody catch them? It comes down to who has the best technology and whose technology will be commonly adopted.”
Slight sales slip

But this year, as gas prices blew past $4 a gallon, demand for hybrids grew beyond Toyota’s ability to build them.

Gasoline-electric hybrids use electric motors to power the vehicle at low speeds or to boost performance of a combustion engine. But hybrids lean heavily on a large battery pack to power the motor, and global battery production remains limited.

Frustrated dealers and Toyota executives joke that Prius’ inventory is not measured in days but in hours.

So far this year, Toyota’s total hybrid market share slipped to 77%, down from 79% over the same months in 2007, according to J.D. Power.

In fact, through August, total U.S. Prius sales have declined 4% from the same months a year earlier, according to Autodata Corp.

Omotoso said Toyota’s hybrid sales and market share slipped because of limited availability and new vehicles introduced by General Motors Corp.
Competition coming quick

A 2% segment share drop may be small, but the hybrid competition is just beginning to heat up.

This month, Chrysler LLC began producing hybrid versions of the Dodge Durango and the Chrysler Aspen.

Daimler AG said Thursday it plans to roll out at least one hybrid car or SUV a year starting in 2009.

GM is expected to unveil the Chevy Volt at its centennial celebration. The much-anticipated Volt, an extended-range electric vehicle, is scheduled to go on sale in 2010.

And on Oct. 2, Honda Motor Co. plans to debut its Insight hybrid and has said it will price that vehicle “significantly below hybrids available today.”

Omotoso said Honda is best positioned to challenge Toyota.

Already No. 2 in hybrid sales, Honda said it eventually expects to sell 500,000 hybrids vehicles annually.
‘Good stuff coming’

Toyota isn’t worried.

“We spend a million dollars an hour on research and development, so it’s not like we’re saying ‘Whoa, we have this hybrid system and it’s selling well and we are going to lay back,’ ” said Steve St. Angelo, Toyota’s senior vice president of North American manufacturing and president of Toyota’s plants in Kentucky. “We are investing and studying and researching all kinds of technology.”

In January, Toyota plans to unveil its third-generation Prius and a new dedicated hybrid model for its Lexus luxury brand at the North American International Auto Show in Detroit. Toyota is also developing a plug-in version of the Prius for 2010.

“I don’t think anyone in this business thinks that the hybrid systems that are out there today are going to be exactly the same hybrid systems five or 10 years from now,” St. Angelo said. “There is a lot of good stuff coming down the pipeline, that’s all I’ve got to say.”

Source: Detroit Free Press

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